Along a smooth, strictly convex indifference curve for two desirable goods X and Y, what happens to the positive marginal rate of substitution of X for Y as X consumption increases?
MRS XY decreases
Along a smooth, strictly convex indifference curve, consuming more X and less Y reduces the amount of Y the consumer is willing to sacrifice for one additional unit of X. Thus the positive marginal rate of substitution of X for Y diminishes.
Important Questions from Indifference curve analysis - Teaching
Which one of the following is not the basic property of indifference curves ?
A consumer buys goods \(x\) and \(y\) at prices ₹4 and ₹2 per unit, respectively, with income ₹100. Preferences are smooth, monotonic and strictly convex, and the optimum is interior. Defining \(MRS_{xy}=MU_x/MU_y\), which pair of conditions must hold at the optimum?
